Change Management Techniques for Merging Startup Companies

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The merging of two startups isn't a rare sight in the business world. However, unifying two separate business entities will always require some degree of change management. Learn the best practices for combining employee teams. 

Very often in the business world, two startup companies will decide to merge into one stronger entity in order to combine resources and opportunities for growth. In fact, the U.S. Small Business Administration reports that nearly 18 percent of all small businesses with paid employees have expanded through the use of business investment strategies and venture capital. This can be a positive way for startups to capitalize on a trend or movement in their industry that otherwise may be impossible to pursue as stand-alone companies. However, when unification occurs, existing employees on both sides of the fence are forced to deal with a gamut of new people, procedures and policies - often in a short period of time. A change event can affect multiple levels of employees who are now faced with new management techniques, redesigned task assignments and the need to adjust to a new pecking order in the workplace. Without careful guidance and ongoing communication from an organized change management task force, employees can quickly become nervous, overwhelmed, argumentative and less productive. According to a 2009 study published by Wiley InterScience, failure rates for change management can range from 60 to 90 percent during a critical transition. This is not what your startup business merger needs at such a crucial time.

6 Ways to Manage Change When Combining Employee Teams

To help maintain good levels of employee morale and motivation, here are some tips for leading a team in a startup environment that's in a merger status.

1. Communicating change to employees

During a merger of startup businesses, both leadership teams should decide how and when the change should be communicated to employees. This can be accomplished in a series of staff meetings - first for the separate teams, and then collectively as one. Allow employees to voice their concerns and provide incentives for employees to stay on board during this transition.

2. Performing a needs assessment study

Another important task that takes place during this time is a needs assessment study of all current employees. Gather a skills and interest inventory, then take note of any employees who show leadership ability for succession planning. Identify any skill gaps and make a plan to train employees or recruit.

3. Creating new collaborative teams

Give employees the opportunity to get to know each other as part of a new more collaborative work approach. Use team building management techniques to create rapport and forge new relationships. Create challenging new projects and assign team members to work together in mutual respect.

4. Keeping employees motivated and focused

During a merger, sometimes employees feel lost or confused about a variety of things. Use effective leadership for motivating employees in a variety of ways. Goal setting, project accountability, corporate incentive programs and career development initiatives are some of the ways to motivate employees.

5. Setting realistic goals for change management

It takes time to fully adjust to a change and experience the positive results it should yield. Convey this message to employees and ask them to work with you so that you all may strategically work towards this goal. Creating this unity is what makes a merger successful.

6. Providing feedback and incentives for positive change

A lot can be said about providing ongoing incentives and feedback to employees during this transitional period in the business. Use management techniques that encourage and recognize positive adjustments in your employees. Use the above change management techniques as suggested methods for alleviating the stress and challenges you may face during a startup merger.  


Tess T.

Tess T.

Binghamton, New York, United States

Tess C. Taylor, SHRM-CP, CCC, CPC, founder of HR Knows, is a seasoned human resource and career coaching professional with nearly 2 decades of corporate experience. She regular contributes to About.com, Forbes, HRDive, Payscale.com Compensation Today, HR Gazette, US News Caree...

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